The Association between Dividend Payouts and Firm Growth: Australian Evidence

43 Pages Posted: 16 Feb 2021

See all articles by Michael J. Dempsey

Michael J. Dempsey

Ton Duc Thang University (TDTU)

Abey Gunasekarage

Monash University; Monash University

Thanh Truong

RMIT University

Date Written: December 16, 2020


We report that whereas firms with high earnings distributions tend to have low to moderate growth (consistent with conventional theory), firms with low earnings distributions run the range between high and low performers. We interpret our findings for firm growth and payout policy in relation to the firm’s location on the Boston Consulting Group (BCG) matrix that combines high/low growth with high/low market share. Our findings suggest that the market has difficulty in distinguishing between these types of firms. A concern is that investor preferences as an outcome may be focused on dividend-paying firms at the expense of younger growing firms in need of retained earnings.

Keywords: Dividends, Firm growth, Dividend payout, Boston Consulting Group (BCG), matrix firm cycle

JEL Classification: G10, G11, G12

Suggested Citation

Dempsey, Michael J. and Gunasekarage, Abeyratna and Truong, Thanh, The Association between Dividend Payouts and Firm Growth: Australian Evidence (December 16, 2020). Available at SSRN: or

Michael J. Dempsey (Contact Author)

Ton Duc Thang University (TDTU) ( email )

District 7
Ho Chi Minh City, 3001

Abeyratna Gunasekarage

Monash University ( email )

Building 11E
Clayton, Victoria 3800

Monash University ( email )

23 Innovation Walk
Wellington Road
Clayton, Victoria 3800

Thanh Truong

RMIT University ( email )

124 La Trobe Street
Melbourne, 3000

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